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Saturday, July 30, 2016

* This is my 2nd article in BusinessWorld special Anniversary issue last Monday.

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Worsening traffic congestion in Metro Manila and other
big cities in the Philippines has led people to believe that this will
negatively affect people’s health, temper, and eventually, the economy. Thus,
the solution is to decongest heavily urbanized cities and spread out
development and modernization to the peripheral cities and provinces.

This subject was partly tackled during the first
BusinessWorld Economic Forum last July 12, 2016 during the panel discussion
about succession and transition. Among the speakers were Ernesto M. Pernia,
Socioeconomic Planning secretary; Kevin L. Tan, senior vice-president &
head of Megaworld Lifestyle Malls, Megaworld Corporation; Bienvenido V. Tantoco
III, president of Rustans Commercial Corporation; Nina D. Aguas, CEO of Insular
Life; and Wilfred Steven Uytengsu, Jr., president and CEO of Alaska Milk Corporation.

Although the focus of the discussion was about how
companies prepared for smooth corporate succession, the speakers also provided
a wider perspective and tackled some national issues and transition. All agreed
that Metro Manila is very congested and that developments should be driven to
less urban and rural areas. Mr. Tan in particular highlighted that many real
estate developers are going out of Metro Manila because there are more
developments in several provinces and big cities, more BPOs, other businesses.

If we look around the world, each country has one or more
political and/or financial capital and these places experience congestion where
the demand for certain services outpaces the supply. This happens because
congestion is natural and part of human nature’s demand for socialization and
interaction. It is faster and easier if the office, the kids’ school, the bank,
grocery store, car repair shop, etc. are just a few kilometers away instead of
dozens or hundreds of kilometers.

Let us check the degree of congestion of the Philippines
compared to other ASEAN nations, and from two small, highly congested
neighbors. A 50-year gap, 1964 to 2014, table is constructed. The per capita
income in purchasing power parity (PPP) valuation over a 30-years gap is also
shown.

What the above table shows are the following:

1. Highly-congested Singapore, Macau, and Hong Kong also
have very high per capita income. There are many explanations for this and the
efficiency gains of having almost everything nearby is definitely one of them.
Brunei is a different case, small population but relatively big land area rich
with energy resources for export, like natural gas.

2. Less-congested Cambodia, Myanmar, and Laos also have
low per capita income of only $5,100 or less. Again, there are many reasons for
this and the inefficiencies and inconvenience of being far from various
economic units like big banks, big grocery stores, etc. should be one of those reasons.

3. The Philippines is second most congested country in
the ASEAN after Singapore. Its population has more than tripled over the past
50 years.

Let us check the numbers for Metro Manila. From 636
square kilometers originally, the megacity now has a land area of 644 square
kilometers (owing to reclaimed areas at the CCP-SM MOA) and a population of
12.877 million, as of the August 2015 census. Based on these numbers, its
population density is 19,995 persons/sq. kms., comparable to that of Macau.

But one report says World Bank data shows that Metro
Manila has a 1,300 square-kilometer land area as of 2010. Or a population
density of 9,906 people per sq. km. in 2015, still higher than those in
Singapore and Hong Kong.

So if congestion is natural for people, how can we
optimize and benefit from the presence of many people per square kilometer of
land?

ACDimatatac-301. More land reclamation. The 800 or so
hectares in the CCP-SM MOA-Entertainment City have created lots of businesses
and jobs for Filipinos. The planned additional reclamation projects in Manila
Bay should proceed, and at a fast rate.

Aside from creating new lands in the sea, there is also a
need to remove huge volume of silt, mud, and solid wastes in river beds of the
Pasig, Las Piñas, and Marilao rivers that drain into Manila Bay. These smelly
solid wastes cannot be brought to dumpsites where most LGUs declare a “not in
my backyard” (NIMBY) policy.

2. More skyways, elevated interchanges and U-turns,
tunnels. Traffic congestion is an engineering problem with engineering
solutions. Such solutions should veer away from hiring more traffic officers
and officials, avoid having more stoplights. Instead, officials should build
more hard infrastructure that can provide service to the public and motorists
24/7 for decades to come.

3. More trains, LRT/MRT, running along C5 and C6, above
ground and underground, extending north and sound, east and west, of Metro
Manila. In Tokyo, Seoul, and Singapore, it is common to see multi-level train
stations and shops underground. Public Private Partnership (PPP) schemes are
already existing to encourage more private funding and construction of these
projects.

4. More low-cost medium- and high-rise residential
condos. This immediately frees up space for more urban forestry and public
parks, unlike in horizontal low-cost housing. Multiple regulations and taxation
by both national and local governments should also decline. These are costs
that are ultimately passed on to condo unit buyers and renters, that make
vertical housing less affordable to the poor and lower middle class.

People and businesses respond to incentives and
disincentives. If there are many disincentives and inconvenience in taking
(often multi-ride) public transportation, then more people will drive their
cars or motorcycles, which contribute to heavy traffic congestion. Government
taxation and regulations that distort the market for urban transportation,
housing, and other services should be reduced.

Bienvenido S. Oplas, Jr. (@noysky on Twitter) is a Fellow
of SEANET and President of Minimal Government Thinkers.